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Village Farms Income Fund Announces Second Quarter 2009 Results

TRADING SYMBOL: The Toronto Stock Exchange:
Village Farms Income Fund - VFF.UN
VANCOUVER, Aug. 14 /CNW/ - Village Farms Income Fund (the "Fund") (TSX:
VFF.UN) announced its results for the quarter ended June 30, 2009.
Second Quarter 2009 Operating Results Summary:
- Revenues of US$42.8 million versus second quarter 2008 sales of
US$44.1 million;
- EBITDA of US$114 thousand versus US$4.5 million in the second quarter
2008;
- Net loss of US$(374) thousand versus net income of $4.1 million in
the second quarter 2008;
Michael DeGiglio, Chief Executive Officer of the Fund's operating
subsidiaries, stated, "While we have corrected our first quarter production
issues, we continue to face challenging market conditions, as compared to
2008, due to factors encompassing supply and demand, consumer pull and our
retail customer mix making pricing challenging especially as compared to the
first half of 2008."
DeGiglio added, "We continue to experience pricing pressure and believe
that 2009 will remain a challenging year in this regard. We experienced
pricing pressure beginning in the third quarter of 2008 such that the
comparisons between 2009 and 2008 results should be more line for the balance
of 2009."
Operational Summary for the Quarter:
Revenue
Revenue for the quarter ended June 30, 2009 decreased $1,280 or 3%, to
$42,773 from $44,053 for the quarter ended June 30, 2008. The decrease in
revenue is due to decreased produce pricing in 2009 versus 2008, as well as a
weaker Canadian dollar in 2009 versus the Canadian to US dollar exchange rate
in 2008. The lower pricing is a result of lower consumer consumption, an
increased supply of hydroponic product from sources such as Holland and
Mexico, as well as a challenging comparison to the second quarter of 2008 in
which pricing benefited from an E. Coli scare. The pricing decrease was offset
by an increased supply of third party produce in the second quarter of 2009 as
compared to the second quarter of 2008.
Gross Profit
Gross profit for the quarter ended June 30, 2009 decreased $3,908 or 72%,
to $1,553 from $5,461 for the quarter ended June 30, 2008. The decrease in
gross profit is directly due to lower pricing and higher volume of third party
produce. Cost of goods are in line with the Fund's 2008 costs.
Selling, General and Administrative
Selling, general and administrative expenses for the quarter ended June
30, 2009 decreased $361 or 11% to $2,843 from $3,204 for the quarter ended
June 30, 2008. The decrease is primarily due to lower selling and marketing
costs in the second quarter of 2009 as compared to the same period in 2008.
Interest, Net
Interest, net for the quarter ended June 30, 2009 decreased $132 to $786
from $918 for the quarter ended June 30, 2008. The decrease is due to the
continued reduction in debt levels throughout 2009 and 2008.
Other Income (Cost)
Other income for the quarter ended June 30, 2009 decreased $784 to $1,260
from other income of $2,044 for the quarter ended June 30, 2008. The decrease
was due to the recognition of a smaller non-cash gain of $837 on an interest
rate swap in the second quarter of 2009 than a similar gain in the second
quarter of 2008 of $1,670, as well as in the second quarter of 2008 a gain of
$590 was realized on the sale of natural gas resulting from excess gas
inventory, which did not occur in 2009.
Net Income (loss)
Net income (loss) for the quarter ended June 30, 2009 decreased $4,436 to
a loss of ($374) from net income of $4,062 for the quarter ended June 30,
2008. The decrease was primarily due to a decrease in gross profit caused by
lower pricing.
EBITDA
EDITDA for the quarter ended June 30, 2009 decreased $4,345 or 97% to
$114 from $4,459 for the quarter ended June 30, 2008 primarily due to a lower
gross profit as result of lower product pricing.
Distributions to Unitholders
The Fund's policy is to distribute annually to Unitholders available cash
provided by operations after cash required for capital expenditures, working
capital reserves, growth capital reserves and other reserves considered
advisable by the Trustees of the Fund. In light of the ongoing uncertainties
and challenging economic times, as well as to create a reserve for the cost of
converting the Fund's Income Trust structure by the end of calendar year 2009
into a regular public corporation and our intent to accelerate our growth
initiatives, the Trustees believe it is prudent to conserve cash for these
reasons and as such suspended the monthly distribution beginning in June 2009,
as previously announced on June 19, 2009. The Trustees will continue to review
the distribution policy throughout 2009.
Non-GAAP Measures
EBITDA is not a recognized measure and does not have standardized meaning
under the Canadian generally accepted accounting principles. Accordingly, this
measure may not be comparable to similar measures presented by other issuers.
Please refer to the Fund's Management's Discussion and Analysis for the
quarter ended June 30, 2009, which is available at www.sedar.com, for
additional information concerning this measure and a reconciliation of this
measure to net earnings and operating cash flows, for the periods presented.
About Village Farms
Village Farms is one of the largest producer, marketer and distributor of
premium-quality, greenhouse grown tomatoes, bell peppers, and cucumbers in
North America. This premium product as well as product produced under
exclusive arrangements with other greenhouse producers is grown in
sophisticated, highly efficient and intensive agricultural greenhouse
facilities located in British Columbia and Texas. Product is marketed and
distributed under the Village Farms(R) brand primarily to retail grocers and
dedicated fresh food distributors throughout the United States, Canada and
Japan. Village Farms currently operates distribution centres located in key
markets in the United States and Canada. Since its inception, Village Farms
has been guided by sustainable agricultural principles which integrate three
main goals; environmental health, economic profitability, and social &amp;
economic equality.
Forward Looking Statements
This press release contains certain "forward looking statements". These
statements relate to future events or future performance and reflect our
expectations regarding our growth, results of operations, performance,
business prospects, opportunities or industry performance and trends. These
forward looking statements reflect our current internal projections,
expectations or beliefs and are based on information currently available to
us. In some cases, forward looking statements can be identified by terminology
such as "may", "will", "should", "expect", "plan", "anticipate", "believe",
"estimate", "predict", "potential", "continue" or the negative of these terms
or other comparable terminology. A number of factors could cause actual events
or results to differ materially from the results discussed in the forward
looking statements. In evaluating these statements, you should specifically
consider various factors, including, but not limited to, such risks and
uncertainties as availability of resource, competitive pressures and changes
in market activity, risks associated with U.S. and international sales and
foreign exchange, regulatory requirements and all of the other "Risk Factors"
set out in the Fund's current annual information form and management's
discussion and analysis for the quarter June 30, 2009, which is available
electronically at www.sedar.com. Actual results may differ materially from any
forward looking statement. Although we believe that the forward looking
statements contained in this press release are based upon reasonable
assumptions, you cannot be assured that actual results will be consistent with
these forward looking statements. These forward looking statements are made as
of the date of this press release, and other than as specifically required by
applicable law, we assume no obligation to update or revise them to reflect
new events or circumstances.
%SEDAR: 00020068E